The numbers: Sales at retailers rose sharply in September in a sign that Americans are spending enough money to sustain an economic recovery — but they are also paying higher prices because of high inflation.
Retail sales climbed 0.7% last month after after a nearly 1% gain in August, the government said Friday. Economists polled by The Wall Street Journal had forecast a 0.2% decline.
The figures are seasonally adjusted.
The government said sales rose in most major categories including auto dealers even though car purchases slowed last month because of major production delays. Automakers can’t produce enough vehicles because of a global computer chip shortage.
Auto sales actually fell last month on an unadjusted basis, but the government’s seasonal-adjustment process turned a sizable decline into a small increase.
Yet even if autos are excluded, U.S. retail sales were still up 0.8% in the month.
Big picture: Americans have plenty of money to spend because of high savings, government stimulus and a tight labor market in which wages are rising sharply.
Figuring out what to spend the money on is a problem, though. The surge in delta cases toward the end of the summer caused more people to spend less on services such as dining out, renting a hotel room or getting on a plane.
Yet many goods such as autos and consumer electronics are in short supply and that’s leading to sharply higher prices. Inflation in the U.S. is running at the fastest pace in 30 years.
The effect is to partly exaggerate the strength of consumer spending, the lifeblood of the U.S. economy.
“Higher prices for consumer goods have been acting to, well, inflate measured retail sales,” said chief economist Richard Moody of Regions Financial.